The Insurance Information Institute (III) has released a report suggesting that excessive lawsuits are contributing to rising auto insurance rates. The report outlines how practices such as third-party litigation funding and outsized jury verdicts are increasing costs for businesses and consumers.
According to the III, plaintiff attorneys are using extensive advertising campaigns to attract more plaintiffs to class action lawsuits. Law firms can also accept funding from third parties to initiate litigation, with no transparency surrounding these third parties. "There are real costs behind what we all know and see plaguing our roads with promises of settlement dollars, as billboard attorneys are racking up fees, and consumers are found to be getting less and less. The price of insurance is the effect, not the cause of risk, and there must be more work done to curb legal system abuse, as auto insurers – both personal and commercial – are seeing significant increases in claims costs when attorneys enter into the picture," said III CEO Sean Kevelighan. He added that "there are multimillions of dark money investor dollars entering into the fray to try and get their share. Some of these investors are sovereign funds, which may very well pose increased national security risks." The III noted that Florida recently enacted tort reform measures in an effort to decrease legal system abuse and attract more insurance providers.
Marc Hyden, director of state government affairs for the R Street Institute, shared his opinion that excessive lawsuits are costing Georgia consumers money. Hyden highlighted that Georgia Gov. Brian Kemp has emphasized the need for tort reform but efforts have "languished" in the state’s legislature. He said a group of state senators attempted to repeal Georgia’s seatbelt "gag rule," but the measure failed to advance from the Senate. "This was just one in a line of failed tort reform measures," Hyden stated. He also mentioned that businesses facing excessive lawsuits or paying massive verdicts are forced to raise their prices, thereby passing the cost of the litigation onto consumers.
According to its website, more than 50 insurance companies are members of the III. The association provides research reports, white papers, and other resources aimed at enhancing knowledge of the insurance industry. The III is affiliated with The Institutes Risk and Insurance Knowledge Group.